Correlation Between Cenovus Energy and Constellation Software
Can any of the company-specific risk be diversified away by investing in both Cenovus Energy and Constellation Software at the same time? Although using a correlation coefficient on its own may not help to predict future stock returns, this module helps to understand the diversifiable risk of combining Cenovus Energy and Constellation Software into the same portfolio, which is an essential part of the fundamental portfolio management process.
By analyzing existing cross correlation between Cenovus Energy and Constellation Software, you can compare the effects of market volatilities on Cenovus Energy and Constellation Software and check how they will diversify away market risk if combined in the same portfolio for a given time horizon. You can also utilize pair trading strategies of matching a long position in Cenovus Energy with a short position of Constellation Software. Check out your portfolio center. Please also check ongoing floating volatility patterns of Cenovus Energy and Constellation Software.
Diversification Opportunities for Cenovus Energy and Constellation Software
-0.43 | Correlation Coefficient |
Very good diversification
The 3 months correlation between Cenovus and Constellation is -0.43. Overlapping area represents the amount of risk that can be diversified away by holding Cenovus Energy and Constellation Software in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Constellation Software and Cenovus Energy is a relative statistical measure of the degree to which these equity instruments tend to move together. The correlation coefficient measures the extent to which returns on Cenovus Energy are associated (or correlated) with Constellation Software. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Constellation Software has no effect on the direction of Cenovus Energy i.e., Cenovus Energy and Constellation Software go up and down completely randomly.
Pair Corralation between Cenovus Energy and Constellation Software
Assuming the 90 days trading horizon Cenovus Energy is expected to under-perform the Constellation Software. In addition to that, Cenovus Energy is 1.24 times more volatile than Constellation Software. It trades about 0.0 of its total potential returns per unit of risk. Constellation Software is currently generating about 0.1 per unit of volatility. If you would invest 260,255 in Constellation Software on October 29, 2024 and sell it today you would earn a total of 203,056 from holding Constellation Software or generate 78.02% return on investment over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Against |
| Strength | Very Weak |
| Accuracy | 100.0% |
| Values | Daily Returns |
Cenovus Energy vs. Constellation Software
Performance |
| Timeline |
| Cenovus Energy |
| Constellation Software |
Cenovus Energy and Constellation Software Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with Cenovus Energy and Constellation Software
The main advantage of trading using opposite Cenovus Energy and Constellation Software positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Cenovus Energy position performs unexpectedly, Constellation Software can make up some of the losses. Pair trading also minimizes risk from directional movements in the market. For example, if an entire industry or sector drops because of unexpected headlines, the short position in Constellation Software will offset losses from the drop in Constellation Software's long position.| Cenovus Energy vs. Canadian Natural Resources | Cenovus Energy vs. Suncor Energy | Cenovus Energy vs. MEG Energy Corp | Cenovus Energy vs. Baytex Energy Corp |
| Constellation Software vs. Kinaxis | Constellation Software vs. Open Text Corp | Constellation Software vs. Enghouse Systems | Constellation Software vs. CGI Inc |
Check out your portfolio center.Note that this page's information should be used as a complementary analysis to find the right mix of equity instruments to add to your existing portfolios or create a brand new portfolio. You can also try the Stocks Directory module to find actively traded stocks across global markets.
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